Dollar Higher As Fed Rate Hike Bets Soar
Hawkish Fed-Speak Continues
The US Dollar is on course to end the week firmly higher as rising treasury yields underscore the focus on Fed tightening expectations. A raft of hawkish Fed commentary this week has seen market pricing for a hike next month rising from just above the 50% level to almost 70% as of writing. Yesterday, Fed’s Williams and Paulson the hawkish sentiments shared by fellow policy makers early in the week, warning of the risks of inflation becoming entrenched at higher levels and the persistent threat from higher energy prices and the fallout of the conflict in the Middle East. Several Fed policymakers this week have voiced support for continued, gradual tightening given this backdrop and USD has risen firmly as a result.
US Jobs Data on Watch
Looking ahead, focus is very much on next week’s headline US jobs data. With market pricing for a hike having jumped this week, USD bulls will be looking for a strong NFP print to corroborate the move higher in USD and keep the rally underpinned. The risk, of course, is that any weakness in the data will fuel a scaling back of tightening expectations, unseating the USD rally. However, if market forecasts are satisfied (or beaten), this should see USD pushing higher again near-term as yields rise further on heightened rate-hike bets.
Technical Views
DXY
The rally has run into some resistance here at the bearish trend line from summer highs. However, while above the 100 level and supported too by the bull channel from YTD lows, focus is on a continuation higher and a challenge of those summer highs and the 101.91 level next. Above there, 103.20 is the next bull target to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.